Investors Bet Climate Adaptation Will Soon Be Profitable

At this month’s climate talks in Scotland, a lot of time was spent condemning the shortage of money available to fight global warming.

Some of the loudest complaints came from less developed nations that are suffering its most extreme effects. Wealthy countries whose emissions are most responsible for the global catastrophe are providing far-too-little cash to help them address its increasingly disastrous consequences, they said.

After many hours of often fraught discussions, the Glasgow climate pact ended up including language that urges developed nations to “at least double their collective provision of climate finance for adaptation” to developing countries by 2025. That would mean that rich countries should make available $40 billion in adaptation funding, according to numbers crunched by Carbon Brief, in the next three years.

It’s clearly not enough (and ever so unlikely to happen if recent history is any indication). In a recent report, the United Nations Environment Programme said annual adaptation costs in developing countries alone are currently estimated to be around $70 billion, with the numbers expected to climb to more than $140 billion in 2030 and to as much as $500 billion in 2050.

Climate adaptation refers to the process of adjusting our existence to current or expected climate-induced changes to the environment. To date, investment has largely focused on mitigation, in areas such as renewable energy and battery technology. The next step will involve innovations as varied as highly efficient air conditioners that cut energy use, floodgates to protect low-lying cities and various technologies aimed at stemming the spread of wildfires.

Even though the lack of appropriate government funding remains a substantive obstacle, executives at Wellington Management Co., one of America’s largest investment firms, said they were encouraged by the focus on climate adaption at COP26. The Boston-based firm said it expects demand for climate adaptation solutions to increase significantly.